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San Rafael finance subcommittee previews FY 2025–26 budget, flags one‑time funding and revenue caution
Summary
City staff presented a preview of the proposed fiscal year 2025–26 budget to the San Rafael City Council finance subcommittee, showing a modest all‑funds surplus, a projected general fund drawdown, rising personnel costs tied to labor agreements, lingering one‑time ARPA allocations and several one‑time funding requests.
San Rafael city staff on May 13 previewed the city’s proposed fiscal year 2025–26 budget for the City Council finance subcommittee, presenting high‑level revenue and spending projections and the short‑term use of one‑time funds.
Director Jared Dimasio told the subcommittee the materials are “a living, breathing draft document” and that the presentation is intended to solicit feedback before the council receives the formal proposal. He said the city projects about $189.6 million in all‑funds revenues supporting roughly $188.2 million in recommended appropriations for next year.
The preview highlighted a narrower near‑term revenue margin than was anticipated at midyear. “We are looking at a drawdown of $6,800,000 of fund balance,” Dimasio said, and staff noted about $6 million of that drawdown would come from assigned fund balance. Staff also said general fund resources for the coming year are estimated at roughly $106.5 million against general fund revenues of about $104 million.
Why it matters: staff said the city’s personnel budget is rising faster than revenue growth, driven primarily by the second year of recently negotiated collective bargaining agreements. Personnel costs across all funds are increasing about 6.5 percent in the proposed budget, and the general fund’s personnel line is a major portion of operating costs.
Major details and supporting context
- Personnel and reserves: Dimasio warned that personnel costs “are outpacing our revenue growth,” leaving less discretion for new ongoing programs and pushing staff to use reprioritization rather than new recurring dollars. Staff described the proposed budget strategy as relying on some one‑time resources to bridge near‑term gaps while limiting new recurring commitments.
- One‑time funds and ARPA: staff described some remaining American Rescue Plan Act (ARPA) funding as largely accounted for in prior allocations (primarily as revenue‑loss replacement), with “a couple million” dollars still effectively moving through fund balance. Staff cautioned that ARPA‑funded items have provided short‑term relief but are not sustainable ongoing revenue.
- Fund balance uses: proposed appropriations include transfers to a liability fund, capital fund and other reserves; staff said they plan one‑time allocations (about $874,000 noted for records management and other projects) while preserving a policy‑consistent reserve posture.
- Recreation subsidy: the budget would continue the current general‑fund subsidy to the recreation program (about $2.4 million), with staff planning a comprehensive fee study to inform any future changes to cost recovery.
Subcommittee and staff next steps
Dimasio said staff will present the full proposed budget to the City Council for an informational session on May 19, and return on June 2 for council action after subcommittee feedback. He emphasized monthly and year‑end refreshes to the estimates and said staff will update projections after the fiscal year close in September. Councilmembers asked staff to make the narrative clear to the public, distinguishing one‑time funds from recurring revenue and explaining what is pledged to ARPA versus remaining fund balance.
Speakers quoted or referenced in this article are participants in the subcommittee meeting and include the first public presentation of the draft budget; no formal vote occurred on the proposed budget at the subcommittee meeting.
